No error of judgement in PNB Housing Finance deal; future course as per SAT order: PNB MD

PNB Housing contended that it has followed Sebi norms in deciding the issue price at Rs 390 apiece.Defending the stance taken at the PNB Housing Finance Board meeting on May 31, Rao said, There was no error of judgement.

Asserting that there was no error of judgment concerning the fund infusion decision of PNB Housing Finance, Punjab National Bank (PNB) managing director S S Mallikarjuna Rao on Tuesday said the future course of action would depend on the SAT's order.

The Securities Appellate Tribunal (SAT) after hearing all parties related to the PNB Housing Finance-Carlyle deal has kept its order reserve. PNB currently holds a 32.6 percent stake in the housing finance firm.

Under the deal announced on May 31, the US-based Carlyle, alongside other investors, is slated to infuse Rs 4,000 crore capital into PNB Housing Finance through the issuance of preference shares and warrants.

However, the deal has come under the scanner of capital markets regulator Sebi. The company was directed to carry out the valuation process of shares as per the relevant legal provisions. PNB Housing contended that it has followed Sebi norms in deciding the issue price at Rs 390 apiece.

Defending the stance taken at the PNB Housing Finance Board meeting on May 31, Rao said, ''There was no error of judgment. If you have seen the share price of PNB Housing Finance in the last 2-2.5 years, it was hovering at the below rate. ICDR guidelines clearly indicate the kind of formula to be used for pricing for listed entities.

''As on the date of taking a decision, it would never have been thought by anyone of us that the price would increase so high in the subsequent days based on the decision taken by the company. So, there was no error of judgment.'' With the difference of opinion between the Articles of Association (AoA) clause and ICDR guidelines, he said many of the issues have been cleared or have moved forward strictly based on Issue of Capital and Disclosure Requirements (ICDR) guidelines.

When PNB Housing Finance consulted the legal firms, he said, there was an opinion that the ICDR guidelines prevail.

Separately, PNB also sought an opinion where an eminent lawyer said there may not be any conflict of interest between the clause in AoA and ICDR guidelines, he said.

''So when a legal provision, the interpretation could be different based on the legal opinion. However, the interpretation will be put to rest by the judiciary, quasi-judiciary, or regulator. We await the judgment by SAT for any implementation and we will be following that in letter and spirit,'' he said.

Clarifying on PNB's direction to PNB Housing Finance on July 4 to consider restructuring the proposed Rs 4,000 crore capital infusion deal led by US-based Carlyle group, Rao said, after discussion at PNB Board taking into account various factors, PNB Housing Finance was asked to clearly follow the SEBI guidance.

''It is not the question of going diametrically opposite of what we have done. We have only told them that the SEBI communication may be looked into in terms of the reconstruction of the entire process. Now it is in the SAT's domain for giving a final judgment and we are all bound to follow the judgment,'' he said.

PNB Housing Finance shares were trading at Rs 681 apiece, up 0.23 percent on BSE during afternoon trade.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)